Cyprus wage growth outpaces euro area average

Cyprus recorded a 3.7 per cent year-on-year increase in hourly labour costs during the first quarter of 2026, exceeding the euro area average, according to figures released by Eurostat. The increase in Cyprus was higher than the 3.2 per cent rise recorded across the euro area and slightly above the 3.6 per cent increase registered in the European Union as a whole. According to Eurostat, hourly labour costs consist of two main components, namely wages and salaries and non-wage costs. Across the entire Cypriot economy, hourly wage costs increased by 3.8 per cent compared with the first quarter of 2025. In the euro area, hourly wages and salaries rose by 3.4 per cent while non-wage costs increased by 2.9 per cent. Across the EU, wages and salaries climbed by 3.7 per cent and the non-wage component rose by 3.2 per cent. The figures showed that Cyprus’ business economy was the main driver of labour cost growth. Within the business economy, total hourly labour costs in Cyprus rose by 4.7 per cent year-on-year, Eurostat reported. At the same, hourly wage costs in the business economy also increased by 4.7 per cent. In contrast, the mainly non-business economy recorded significantly slower growth. In this segment of the economy, both total labour costs and wage costs increased by just 1 per cent compared with the same period a year earlier. Eurostat’s data also showed that labour costs in Cyprus’ industrial sector rose at the same pace as the broader business economy. In industry, both total labour costs and wages increased by 4.7 per cent year-on-year, the latest report showed. Across the euro area, hourly labour costs increased by 3.3 per cent in the mainly non-business economy and by 3.2 per cent in the business economy. Within the euro area’s business sectors, labour costs rose by 3.3 per cent in industry, 4.1 per cent in construction and 3.1 per cent in services. At EU level, hourly labour costs increased by 3.7 per cent in the mainly non-business economy and by 3.5 per cent in the business economy. Labour costs across the EU rose by 3.6 per cent in industry, 4.2 per cent in construction and 3.4 per cent in services. Looking at individual sectors across the EU, the highest annual increases in hourly wage costs were recorded in mining and quarrying, which saw a rise of 5.7 per cent. Real estate activities and professional, scientific and technical activities followed with increases of 4.8 per cent each. Moreover, construction and education both registered increases of 4.4 per cent. The lowest annual rise in hourly wage costs was recorded in administrative and support service activities, at 1 per cent. Accommodation and food service activities followed with an increase of 2.7 per cent, while arts, entertainment and recreation recorded growth of 2.8 per cent. In terms of the non-wage component of labour costs, mining and quarrying once again recorded the largest increase, rising by 5.3 per cent. Information and communication activities followed with a rise of 4.5 per cent, while administrative and support services recorded growth of 4.4 per cent. What is more, construction and other service activities each posted increases of 3.8 per cent. The lowest increases in non-wage costs were registered in professional, scientific and technical activities and in arts, entertainment and recreation, both of which rose by 1.6 per cent. Country-by-country data showed that Hungary recorded the highest increase in hourly wage costs across the whole economy, with a year-on-year rise of 16.4 per cent. Bulgaria followed with growth of 13.2 per cent. Croatia registered the third-highest increase, at 9.2 per cent. At the opposite end of the scale, Malta recorded the lowest increase among EU member states, at 1.3 per cent. France followed with wage cost growth of 1.8 per cent, while Denmark and Latvia each registered increases of 2.5 per cent. The latest figures indicate that Cyprus continued to experience stronger labour cost growth than the euro area average during the opening quarter of 2026, with the increase being driven primarily by developments in the business sector.